Commodity Derivatives
Commodity derivatives certification — agri & non-agri commodities, futures, options, hedging, and warehousing.
Exam Pattern & Marking
Detailed Syllabus
10 chapters · 100 total marks
| # | Chapter | Marks | Practice Qs |
|---|---|---|---|
| 1 | XVI Clearing, Settlement and Risk Management | 15 | 75 |
| 2 | XVI Commodity Futures | 15 | 75 |
| 3 | XVI Commodity Options | 15 | 75 |
| 4 | XVI Introduction to Commodity Markets | 10 | 50 |
| 5 | XVI Legal and Regulatory Environment | 10 | 50 |
| 6 | XVI Trading Mechanism | 10 | 50 |
| 7 | XVI Uses of Commodity Derivatives | 10 | 50 |
| 8 | XVI Accounting and Taxation | 5 | 25 |
| 9 | XVI Code of Conduct and Investor Protection | 5 | 25 |
| 10 | XVI Commodity Indices | 5 | 25 |
| Total | 100 | 500 |
Marks per chapter reflect the official NISM syllabus weightage. Practice question counts show the bank size in our app — use them to gauge depth of preparation needed per chapter.
Key Knowledge Areas
Overview
Series XVI is the commodity derivatives certification — required for dealers and risk managers at MCX, NCDEX, BSE, and NSE commodity exchanges. It covers agricultural commodities (chana, soyabean, cotton), bullion (gold, silver), energy (crude, natural gas), and base metals (copper, aluminium, zinc, lead).
At a glance: 100 questions · 2 hours · 60% pass mark · 0.25 negative marking · ₹1,500 + GST.
Who should take XVI
- Commodity dealers at brokers
- Hedgers in metal, agri, and energy industries
- Treasury staff with commodity exposure
- Trading desk members at FIIs trading Indian commodities
Key Knowledge Areas
Commodity classifications
| Class | Examples | Key driver |
|---|---|---|
| Bullion | Gold, silver | INR-USD, global rates, inflation |
| Energy | Crude oil, natural gas | OPEC supply, geopolitics, USD |
| Base metals | Copper, aluminium, zinc, lead | Industrial demand, China |
| Agri | Chana, soyabean, cotton, mustard | Monsoon, MSP, exports |
Pricing & cost of carry
Commodity futures pricing: F = S × e^((r + u − y)T), where u is storage cost and y is convenience yield (benefit of holding physical).
For non-storable commodities (electricity), the formula breaks down — pricing is purely supply-demand.
Delivery & warehousing
Unlike equity F&O, commodity F&O often involves physical delivery:
- Compulsory delivery contracts — must result in physical exchange (most agri)
- Cash-settled — no physical exchange (some indices, intl bullion contracts)
- Optional delivery — buyer/seller can opt in (some metal contracts)
Warehousing is regulated by WDRA (Warehousing Development and Regulatory Authority). Approved warehouses issue electronic warehouse receipts (eWR) used for delivery.
Hedging strategies
Producer hedging (short futures): A wheat farmer expecting harvest in 3 months sells wheat futures to lock in price.
Consumer hedging (long futures): A jeweller buying gold for festival season buys gold futures to cap procurement cost.
Inventory hedging: A copper smelter holding inventory shorts copper futures to neutralise mark-to-market on stock.
Regulatory framework
- SEBI — primary regulator (since merging with FMC in 2015)
- Exchanges — MCX (largest), NCDEX (agri-focused), BSE, NSE-Commodity
- WDRA — warehouse regulation
- APMC — state-level agri marketing
Exam Tips
Tip 1: Convenience yield concept distinguishes commodity futures from financial futures. Know how positive/negative yield affects backwardation and contango.
Tip 2: Delivery mechanism is heavy on the exam. Know which contracts are compulsory delivery vs cash-settled.
Tip 3: Position limits and circuit filters per commodity class are tested. Memorise the broad categories.
Tip 4: Recent SEBI circulars on commodity participants (FPIs, mutual funds, institutional flow) come up. Stay current.
Try the Free Quiz
Test your knowledge with our free Series XVI practice quiz — or get the full bank of 500+ XVI questions plus mock tests in the NISM Exam Prep app.
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